OPPORTUNITIES ABOUND FOR U.S. MILITARY VEHICLES.

• Author: Tadjdeh, Yasmin
• Position: INTERNATIONAL VEHICLE MARKET

Foreign nations looking to modernize and build up their military vehicle fleets will provide U.S. manufacturers with new revenue streams over the next several years, analysts and industry leaders have said.

Experts see opportunities from South America to Asia as countries face new and enduring security threats coupled with a need to replace aging fleets of vehicles. U.S. companies--which offer specialized and advanced systems--will likely reap the benefits, they said.

Globally, the market for military vehicles is rising, said John Hernandez, senior industry analyst for North America at Frost & Sullivan. In 2018, U.S. manufacturers secured $10.5 billion in sales which include follow-on upgrades.

"The United States leads the market," he said. "They're the largest arms supplier in the world."

Global modernization efforts are driving the demand, he added. Countries are seeking more advanced systems that can address a range of missions.

They are trying to "modernize what they currently have and also to develop new systems that will take into consideration future threats," he said.

In Europe, Russia is keeping neighboring nations on their toes, said Mark Cancian, a senior fellow at the Center for Strategic and International Studies. There is an increased focus on building up ground forces.

"Allied defense budgets are rising," he said. "You see that in NATO. More of them are getting to the two percent [GDP goal] and of course they're under a lot of pressure to do that."

President Donald Trump has been aggressively pushing NATO countries to invest two percent of their GDP into defense. Only a handful currently meet that pledge.

"The money is going to be there--or at least some money will be there--for modernization, and ground vehicles will be one of the systems that countries will likely turn to," he said.

"The challenge from Russia is driving the budgets overall, and the fact that Russia is a ground power that could make a grab on Eastern Europe puts a premium on ground forces," he said. "You see that with NATO as they are putting brigades into the Baltic Republics."

Moscow has been upgrading its ground forces and has even developed a next-generation main battle tank called the T-14 Armata.

Geopolitical issues in Europe are fueling more sales for BAE Systems, said Dennis Hancock, director of international combat vehicle programs for the company.

"Europe is a little bit of a new entry for us in some vehicle realms, especially around infantry fighting vehicles," he said. "We're seeing a dialogue and...